Europe’s Real Economic Challenges

2017 ◽  
Author(s):  
Martin Sandbu
Keyword(s):  
Capital Flows ◽  
Demand Management ◽  
Aggregate Demand ◽  
Balance Of Payments ◽  
Living Standards ◽  
Real Economy ◽  
Single Currency ◽  
Long Run ◽  
National Borders

This chapter defines the three main economic challenges of the members of the single currency. The first is to deal better with balance-of-payments crises — both finish the job of fixing the financial fragmentation from 2010–11 and safeguard against future ones. This is a financial and monetary task, one of ensuring that capital flows across national borders in an orderly and efficient way. The second challenge is a ‘real economy’ task of ensuring that each economy's resources are fully employed: the classic macroeconomic problem of aggregate demand management. Both of these tasks are largely about undoing self-inflicted errors. Finally, the long-run challenge is to make labour and capital as productive as they can be, which is what sustains long-term improvement in living standards.

A Balance of Payments for the Thirteen Colonies, 1768–1772: A Summary

1965 ◽  
Vol 25 (4) ◽  
pp. 691-695 ◽  
Author(s):  
James Shepherd
Keyword(s):  
Great Britain ◽  
Capital Flows ◽  
West Indies ◽  
Balance Of Payments ◽  
Large Share ◽  
Commodity Trade ◽  
The West ◽  
Colonial Economy ◽  
Total Market

Any advance in our knowledge about the growth and development of the American colonial economy must first start with a balance-of-payments study. The trade of the thirteen colonies with other areas— principally Great Britain, Ireland, southern Europe, the Wine Islands, the West Indies, and Africa—certainly must have formed, together with the coastal trade between the colonies, a large share of the total market activity. My conclusions from such a study are that the description given of commodity trade by colonial historians has been accurate but that once services as well as goods are considered the picture changes to one where there are only small positive or negative balances remaining on current account for the various regions. As a result, I would conclude that long-term capital flows from Great Britain to the colonies were either small or nil during this period.

Trade, Distribution, and Economic Growth in Colonial America

1972 ◽  
Vol 32 (1) ◽  
pp. 128-145 ◽  
Author(s):  
James F. Shepherd ◽  
Gary M. Walton
Keyword(s):  
Eighteenth Century ◽  
American Revolution ◽  
Colonial America ◽  
Colonial Period ◽  
Balance Of Payments ◽  
Long Run ◽  
Data Limitations ◽  
Trade Distribution ◽  
Long Term Trends

The purpose of this paper is to present some of the findings and contentions of our forthcoming study of shipping, distribution, and overseas trade in colonial America from the middle of the seventeenth century to the American Revolution, with emphasis upon the later years. In order to provide an explanation of the contribution of overseas trade to colonial growth, we begin the study by proposing a simple theoretical framework for viewing economic development in the colonies. Then, to provide some perspective for the study, we examine the long-term trends in output, population, and overseas trade (subject to fairly severe data limitations, which allow us to make only tentative statements about these long-term trends, and which largely limit us to the eighteenth century). Next we examine the costs of shipping and distributing commodities in overseas trade and show that these costs declined over the long run. The increased productivity in shipping is explicitly measured, and the sources of these advances analyzed. Finally, a balance-of-payments study is presented for 1768 through 1772, the only years in the colonial period for which we have statistics of all legal overseas trade.

scholarly journals The New Wave of Currency Devaluations in Africa – Will the Devalued Birr Help the Coffee Exports?

2019 ◽  
Vol 12 (4.) ◽  
pp. 101-118
Author(s):  
Szabolcs Pasztor
Keyword(s):  
Developing Countries ◽  
Current Account Deficit ◽  
Balance Of Payments ◽  
New Wave ◽  
Long Run ◽  
Negative Effect ◽  
Short And Long Term ◽  
Coffee Sector ◽  
The Impact

Despite the fact that currency devaluations are likely to have a negative effect on the economy in the long run, Ethiopia devalued its national currency, the birr (ETB), by 15 percent in 2017. They turned to this option in the hope of attracting more investments from abroad, decreasing import bills, improving the current account deficit and giving a boost to the exports of the coffee sector. A couple of months later, the impact seems to be promising because the export has been revived in some areas. However, it has to be stressed that the imported commodities may experience a price increase, there can be a widening balance of payments deficit and rising inflation. The paper aims to shed more light on the short- and long-term impacts of currency devaluations in the developing countries with a special emphasis on Ethiopia. Also, the recent Ethiopian measure is to be analyzed in greater detail highlighting the impacts on export earnings, import bills, the balance of payments, and on the overall competitiveness of the coffee sector.

scholarly journals The Need to Approach the Management of the Tourist Destination by the Central and Local Public Authorities in Romania

2017 ◽  
Vol 12 (3) ◽  
pp. 141-158
Author(s):  
Virgil Nicula ◽  
Simona Spânu
Keyword(s):  
Professional Associations ◽  
Living Standards ◽  
Social Categories ◽  
Tourist Destination ◽  
Public Authorities ◽  
Economic Agents ◽  
Long Run ◽  
Anthropogenic Resources ◽  
Private Investors

Abstract In the medium and long term, priorities in the development of tourism aim to develop a complex tourist offer, making the most of the natural and anthropogenic resources existing in connection with the preservation of the environment and the heritage. On the long run, it will contribute to raising the living standards of the population, especially social categories with lower chances of reintegration into the labour market (people made redundant in industry, elderly people etc.). Implementation of the strategy at regional level must be achieved through an active partnership between Romanian public authorities, economic agents and private investors, with the involvement of the federation of employers in the sector and of the professional associations.

scholarly journals Capital Flows and Real Exchange Rate Overvaluation - A Chronic Ailment: Evidence from Pakistan

2009 ◽  
Vol 14 (Special Edition) ◽  
pp. 51-86 ◽  
Author(s):  
Hamna Ahmed
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Capital Flows ◽  
Government Spending ◽  
Terms Of Trade ◽  
Dutch Disease ◽  
Economic Assistance ◽  
Long Run ◽  
Index Estimation

The objective of this study is twofold: (i) to estimate the equilibrium real exchange rate (RER) from a long-run perspective and calculate the degree of overvaluation for the period 1972–2007, and (ii) to test the Dutch Disease hypothesis concerning the effect of capital flows on the RER in Pakistan. Based on various macroeconomic fundamentals suggested in economic literature by Edwards (1988, 1989, 1994), Elbadawi (1994), and Montiel (1997), the equilibrium RER is estimated as a function of the terms of trade, government spending, degree of openness, workers’ remittances, foreign direct investment (FDI) flows, and foreign economic assistance. In view of this study’s long-term focus, all unsustainable and temporary flows are filtered out to obtain an accurate misalignment index. Estimation results are in line with theoretical postulations: an increase in capital flows, government spending on nontradable goods and terms of trade improvement are consistent with an appreciation of the RER, while an increase in the degree of openness is expected to depreciate the RER. Findings suggest that the RER suffers from chronic overvaluation in Pakistan. In spite of filtering out unsustainable and temporary flows, overvaluation increased from 0.75% in 2001 to 22.9% in 2007. A sharp rise in FDI flows (between 2005 and 2007) and an increase in remittances (between 2002 and 2007) are among the main factors that have contributed to this persistent overvaluation. Results also suggest that the Dutch Disease hypothesis holds in the case of Pakistan.

Thirlwall's law, external debt sustainability, and the balance-of-payments-constrained level and growth rates of output

2019 ◽  
Vol 7 (4) ◽  
pp. 486-497
Author(s):  
Gustavo Bhering ◽  
Franklin Serrano ◽  
Fabio Freitas
Keyword(s):  
Capital Flows ◽  
Income Elasticity ◽  
Growth Models ◽  
Critical Evaluation ◽  
External Debt ◽  
Balance Of Payments ◽  
Debt Sustainability ◽  
Rate Of Growth ◽  
Long Run ◽  
Alternative Approach

Thirlwall's law, given by the ratio of the rate of growth of exports to the income elasticity of imports is a key result of balance-of-payments-constrained long-run growth models with balanced trade. Some authors have extended the analysis to incorporate long-run net capital flows. We provide a critical evaluation of these efforts and propose an alternative approach to deal with long-run external debt sustainability, based on two key features. First, we treat the external debt-to-exports ratio as the relevant indicator for the analysis of external debt sustainability. Second, we include an external credit constraint in the form of a maximum acceptable level of this ratio. The main results that emerge are that sustainable long-run capital flows can positively affect the long-run level of output, but not the rate of growth compatible with the balance-of-payments constraint, as exports must ultimately tend to grow at the same rate as imports. Therefore, Thirlwall's law still holds.

Participation and productivity will drive long run GDP

2018 ◽  
Keyword(s):  
Interest Rates ◽  
Developed Countries ◽  
Living Standards ◽  
Lower Growth ◽  
Secular Stagnation ◽  
Content Type ◽  
Long Run ◽  
Advanced Economies ◽  
Labour Participation

Subject OECD long-run growth projections are predicated on the 'secular stagnation' argument. Significance The OECD has sharply reduced its outlook for long-term rich-world growth with interest rates rising commensurately slower. Moreover, the International Labour Organization projects even weaker workforce growth than the OECD in the advanced economies in the 2020s. Impacts Trade among developing countries accounts for near 30% of all trade (from 10% in 1995) and will soon top trade among developed countries. Efforts to raise labour participation, quality and productivity are key to raising living standards. Lower growth makes it harder to stabilise debt-to-GDP ratios, just as ageing rich-world populations raise pension and health costs.

scholarly journals New Structuralism and the balance-of-payments constraint

2019 ◽  
Vol 7 (4) ◽  
pp. 517-536 ◽  
Author(s):  
Gabriel Porcile ◽  
Guiliano Toshiro Yajima
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Income Elasticity ◽  
Aggregate Demand ◽  
Positive Function ◽  
Balance Of Payments ◽  
Long Run ◽  
Innovation And Diffusion ◽  
International Convergence ◽  
Pattern Of Specialization

Structuralists and Post-Keynesians share the perspective that in the long run economic growth is shaped by the income elasticity of exports and imports, and that such elasticities are a positive function of the degree of diversification and technological intensity of the pattern of specialization. Since the mid 1970s, New Structuralists began to stress the role of two sets of variables in driving the pattern of specialization: a stable and competitive real exchange rate, and the relative intensity of innovation and diffusion of technology in the center and periphery. In this paper we modify the balance-of-payments-constrained growth model to include these two sets of variables. The model provides a mechanism that ensures the validity of the original Thirlwall perspective, namely that adjustment to the balance-of-payments-constrained equilibrium takes place through changes in the rate of growth of aggregate demand rather than through changes in relative prices. In addition, it shows that a macroeconomic policy aimed at sustaining a competitive real exchange rate is a necessary complement to an active industrial policy for fostering international convergence.

scholarly journals Impact of shocks in domestic aggregate demand for natural gas on domestic aggregate energy consumption in China

2018 ◽  
Vol 2 (1) ◽  
pp. 19-28
Author(s):  
Manzoor Ahmad ◽  
Shehzad Khan ◽  
Kiran Alim
Keyword(s):  
Energy Consumption ◽  
Natural Gas ◽  
Time Series Data ◽  
Aggregate Demand ◽  
Series Data ◽  
Positive Component ◽  
Long Run ◽  
Short Run ◽  
Nonlinear Autoregressive

This paper examines the possible asymmetric transmissions from domestic aggregate demand for natural gas to domestic aggregate energy consumption in China using time series data from 1970 to 2016. The nonlinear autoregressive distributed lags (NARDL) model is employed to check the possibility of long-term asymmetric nexus among variables. The empirical findings confirm the existence of symmetric cointegration between the domestic aggregate demand for natural gas and domestic aggregate energy consumption. The results also indicate that positive shocks in domestic aggregate energy consumption lead an increase in domestic aggregate energy consumption in both short-run and long-run. While the NARDL dynamic multiplier graph suggests that the positive component of domestic aggregate demand for natural gas has deep impact on domestic aggregate energy consumption.

scholarly journals Research on the influence mechanism of China’s industrial circulation on long-term interest rate: Empirical analysis based on VEC model

2021 ◽  
Vol 251 ◽  
pp. 01081
Author(s):  
Qiao Han ◽  
Yang Jiayun
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Empirical Test ◽  
Supply And Demand ◽  
State Space Model ◽  
Real Economy ◽  
Influence Mechanism ◽  
Vec Model ◽  
Long Run

As the adjustment space of China’s monetary policy is gradually expanding and the adjustment intensity is gradually increasing, the influence of external factors on money supply and demand is gradually weakening. The endogenous mechanism of interest rate in the real economy needs to be further explored. Through the long-term interest rate model, the paper reveals the relationship between the circulation status of real economy and long-term interest rate. Based on the monthly data of China from 2003 to 2019, the paper establishes the error-correction VEC model and the state-space model to conduct empirical test and analysis on the influence mechanism of long-term interest rate. The final results show that exogenous factors such as monetary policy have certain influence on interest rate in the short run, while in the long run, interest rate is affected by the average circulation of goods described by the inventory increment of manufacturers and the actual production input of enterprises.

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